State Tax Rulings
Free state tax letter rulings and advisory opinions with plain-English summaries, full citations, and the original source on every page.
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Could a Virginia domiciliary who was also a District of Columbia actual resident claim a Virginia credit for District income tax?
Potentially yes. Because the wife was a Virginia domiciliary and a District actual resident, she filed resident returns in both jurisdictions and Virginia's usual bar for D.C. nonresidents did not app…
Did a temporary employer-required assignment outside Virginia make the employee a part-year Virginia resident for 2012?
No. The employee kept her Virginia home, driver's license, vehicle registration, and voter registration and returned when the temporary assignment ended. Virginia taxed all of her 2012 income, upheld …
Is the sale and installation of a custom closet-organizing system a nontaxable capital improvement?
No - it is taxable. Installing tangible personal property is taxable unless the result is a capital improvement, which requires all three tests: it substantially adds value or prolongs the property's …
Does Georgia tax a single-price bundle of electronically delivered software, implementation, installation, upgrades, updates, and technical support?
No, on the facts presented. Electronically delivered software was not tangible personal property, and the implementation, installation, upgrades, updates, and technical support were not taxable servic…
Were prepaid software-license fees and related monthly license and support fees exempt from Illinois Retailers' Occupation Tax?
Yes. IDOR reviewed the company's license agreements and found that they met all five requirements for a nontaxable software license under 86 Ill. Adm. Code 130.1935(a)(1). Because the license fees wer…
Were chocolate-fruit and fruit-honey bars taxed as candy or low-rate food in Illinois?
IDOR did not expressly classify the two submitted bars. It explained that qualifying food for off-premises consumption was taxed at the 1% State rate, while candy was taxed at 6.25%, plus applicable l…
Did a couple's unsupported claim of living in another state overcome Virginia's estimated 2012 resident assessment?
No. The couple offered no objective evidence that they abandoned Virginia and acquired another domicile, so they did not overcome the presumed-correct estimate. Virginia allowed 30 days to provide ade…
Could Virginia hear a BPOL classification appeal when the city claimed its own procedural rules made the local appeal invalid?
Yes. Whatever procedural objections the city raised, its letter decided the business-classification issue and included the required notice for a final local determination. The taxpayer timely appealed…
Did Virginia double-tax a fabricator's untaxed sales when its customer had already been audited for part of the same period?
No. The fabricator's sample included the customer, but the extrapolation assessed nothing for August 2011 through July 2014—the period covered by the customer's audit. Virginia taxed the fabricator's …
Could an employer avoid Virginia withholding tax, penalties, and interest because it did not know the rule and was not notified sooner?
No. Employers must self-assess and withhold Virginia tax from covered wages; ignorance of the law and the Department's inability to flag every deficiency immediately were not grounds for relief. Virgi…
Could a Virginia corporation subtract health-insurance premiums that were not federally deductible because it claimed the federal Small Business Health Care Tax Credit?
No. Virginia starts with federal taxable income and allows only the additions and subtractions authorized by state statute. Although Virginia expressly permits a subtraction for wages disallowed becau…
Could a taxpayer reverse Virginia's 2011 federal-income adjustment without providing the requested official IRS transcript?
Not on the existing record. Virginia begins with federal adjusted gross income, and the taxpayer provided no official IRS document showing that Virginia's matching adjustment was wrong. The assessment…
Is a service contract covering both computer hardware and software subject to New York sales tax?
Yes - the whole contract is taxable unless the software part is broken out. Maintaining, servicing and repairing computer hardware (tangible personal property) is a taxable service, and buying a maint…
Did a lower deed price and private appraisal require Virginia to override the county clerk's assessed-value calculation of recordation tax?
Not automatically. A recent property assessment strongly indicated fair market value, and a private appraisal plus disagreement did not by itself show the clerk's valuation was unreasonable. Virginia …
Did a lease and claimed out-of-state driver's license prove that a taxpayer had abandoned Virginia domicile for 2014?
No. The taxpayer showed some ties to another state, but Virginia records still showed a vehicle and driver's license here, and his federal return used a Virginia address. Because he bore the burden of…
Could a Virginia resident claim a Virginia credit for California tax paid on capital gain passed through from California rental property?
No, on the record presented. Because California generally lets a Virginia resident claim a reciprocal credit on the California nonresident return, Virginia does not also allow the resident to claim th…
Did paying more than 90% of Elizabeth Brower's 2014 income tax by January 2015 eliminate the penalty for short estimated installments earlier in the year?
No. Elizabeth Brower paid $4,100 of her $4,231 2014 liability by January 2015, exceeding 90%, but her April, June, and September cumulative payments did not reach the required 25%, 50%, and 75% instal…
What is South Carolina's tax interest rate for underpayments and overpayments for the period April 1, 2016 through June 30, 2016 (per SC IL #16-4)?
4%. SC Information Letter #16-4 sets South Carolina's interest rate on tax underpayments and overpayments at 4% for the period April 1, 2016 through June 30, 2016. Interest is compounded daily, except…
Could a taxpayer avoid Virginia income-tax assessments by arguing that federal and state income-tax payment is voluntary?
No. Voluntary compliance does not make payment optional or prevent Virginia from assessing unpaid tax. The taxpayer also failed to document possible Maryland residency and reciprocity eligibility, so …
Which corporations belong on a Virginia consolidated income-tax return, and could two eligible affiliates amend prior returns to remove ineligible entities?
Only eligible affiliates that would be subject to Virginia income tax on separate returns belong in the consolidated return. Corporations without Virginia-source income, or otherwise excluded by the r…
Does a laparoscopic-surgery trocar system that delivers carbon dioxide gas (not fluids or drugs) into the abdomen qualify for Texas's sales tax exemption for intravenous (IV) systems?
No. The Comptroller ruled that a laparoscopic-surgery trocar system -- an access port, cannula, gas-pressure control device, and connecting tubing that introduces carbon dioxide gas into the abdomen t…
Is equipment a repair shop buys to perform taxable repairs itself subject to sales tax?
Yes. A car dealer's purchase of a wheel-alignment machine is a taxable retail sale of tangible personal property. The machine is used to perform the dealer's repair and alignment work, which is a taxa…
Could an Illinois utility charge Gas Revenue Tax for delivering out-of-state natural gas to a church exempt from Gas Use Tax?
Yes. The church's religious-organization exemption from Gas Use Tax on the gas purchase did not exempt the utility's Illinois delivery and related service charges from Gas Revenue Tax. The delivery ta…
What Virginia tax interest rates applied during the second quarter of 2016?
For April 1 through June 30, 2016, Virginia's ordinary state interest rates were 6% on tax underpayments and assessments and 6% on noncorporate overpayments and refunds. The reduced rate for qualifyin…
Can a planned Convention Center Annex more than 1,000 feet from the City of Arlington's existing convention center still make a nearby hotel project eligible for the state hotel-project tax rebate, and does a ground lease to a private developer break the required city-ownership link?
Yes to both. The Comptroller ruled that a newly built Convention Center Annex -- located separately from, and more than 1,000 feet away from, the City of Arlington's existing convention center -- will…
Can the City of Nacogdoches get a rebate of state hotel occupancy and sales taxes for a rehabilitated downtown hotel/convention center project, and does it matter whether the city or the developer owns the convention center building?
Yes, but ownership structure controls. The Comptroller ruled the City of Nacogdoches -- as a smaller city qualifying as an 'eligible central municipality' because it hosts a general academic teaching …
Is a tablet-based remote health-monitoring product, and the devices sold with it, subject to sales tax?
It splits. The monthly fee for the product is taxable prewritten software: caregivers log in to the provider's web portal and gain constructive possession of the software (the right to use and direct …
Is a lump-sum payment from a former employer's 401(k) restoration plan, distributed after the taxpayer retired and left New York, exempt from New York State and City tax?
Yes. The lump sum from the nonqualified 401(k) restoration plan is exempt under the federal Pension Source Law (4 USC § 114) because the taxpayer was a nonresident when paid. It also did not accrue to…
When did Illinois tax refundable and nonrefundable advance payments for short-term automobile rentals?
A nonrefundable reservation fee was subject to the 5% Automobile Renting Tax when received because the customer was irrevocably liable for the right to possess the car, including when the customer lat…
Who owed Illinois tax when an out-of-state company leased semi-trailers for use in Illinois under true leases?
The lessor owed Illinois Use Tax on its cost price when true-leased trailers were brought into Illinois; rental receipts were not taxed and the lessee owed no tax. Tax properly due and paid to another…
Did a dissolving, steroid-releasing sinus implant qualify for Illinois' reduced tax rate for medicine or drugs?
Yes. Based on its instructions for use and sustained release of mometasone furoate through a bioabsorbable sinus implant, IDOR treated the product as a medicine or drug taxable at the 1% state rate pl…
After an asset acquisition, can the buyer continue the seller's Georgia Quality Jobs Tax Credit and Jobs Tax Credit carryforwards?
The two credits receive different treatment. The buyer could not claim or use the acquired taxpayer's Quality Jobs Tax Credit or carryforward because the governing statute contained no transfer provis…
Were Love Tree Builders' cash receipts from Minnesota storm cleanup subject to New Mexico gross receipts tax because they appeared on the owner's federal Schedule C?
No. A Schedule C match showed $24,201 not reported on New Mexico CRS returns, but Love Tree Builders credibly proved the cash came from emergency cleanup and repair services performed in Minnesota aft…
Is the fee an amusement park guest pays to use an electronic storage locker a taxable rental of tangible personal property, or a nontaxable storage service -- and did the Comptroller's answer change from an earlier ruling to the same taxpayer?
Nontaxable, but only going forward. The Comptroller ruled that fees amusement park guests pay to use an electronic storage locker are a nontaxable storage service, not a taxable rental of tangible per…
Are outsourced paper and electronic billing services subject to Colorado sales tax, even though a paper bill changes hands?
No. Outsourced paper and electronic billing services are a nontaxable service in Colorado, and the paper bill that changes hands is just an incidental transfer of property tied to that service — so th…
Could a nonfiler overturn a Virginia income-tax assessment merely by saying he lived in another state and then attended out-of-state graduate school?
No. The taxpayer did not answer Virginia's documentation request or prove that he had abandoned Virginia domicile and acquired another one. Because the assessment was presumed correct, Virginia upheld…
Could a taxpayer appeal a county's local real-property tax assessments to the Virginia Department of Taxation?
No. Virginia law did not authorize the Department of Taxation to review local real-property tax assessments or decide whether the county commissioner properly declined the taxpayer's appeal. Those dis…
Could a taxpayer reverse Virginia's W-2-based corrections to federal adjusted gross income and withholding without objective contrary evidence?
No. The return apparently reported Virginia withholding as federal adjusted gross income. Virginia corrected income and withholding to the amounts on the taxpayer's W-2 and allowed a personal exemptio…
Could Virginia residents claim an out-of-state tax credit for District of Columbia Unincorporated Business Franchise Tax paid on sole-proprietor income?
No. The District of Columbia Unincorporated Business Franchise Tax is a franchise tax that does not tax all of an individual's income, so it is not the kind of individual income tax eligible for Virgi…
Could a fixed-date conformity subtraction create a Virginia corporate net operating loss even when the corporation reported no federal loss?
Yes. Virginia federal taxable income equals federal taxable income plus fixed-date conformity additions minus fixed-date conformity subtractions. Because the 2014 subtraction exceeded the other two am…
Did saying that a married couple paid income tax in Virginia and another state prove that they had changed domicile for 2012?
No. The couple did not provide objective evidence that they abandoned Virginia domicile and acquired another one, and paying tax in two states did not establish the change. Virginia kept the best-info…
Did claiming an out-of-state residence from 2011 through 2015 overturn a Virginia best-information assessment for 2012 without supporting records?
No. Although the taxpayer said he lived elsewhere from July 2011 until February 2015, he ignored Virginia's documentation request and supplied no substantial evidence about his domicile. The 2012 asse…
Did saying she moved out of Virginia in March 2013 prove that a nonfiler was not subject to Virginia income tax for 2012?
No. The claimed March 2013 move did not document the taxpayer's 2012 status, and she did not answer Virginia's records request. The assessment remained presumed correct, but Virginia allowed one final…
Could a nonfiler overturn a 2012 Virginia assessment merely by claiming residence in another state without supplying the requested records?
No. A bare claim of residence elsewhere did not prove abandonment of Virginia domicile, and the taxpayer ignored Virginia's documentation request. The best-information assessment remained presumed cor…
Did Virginia sales tax apply to a provider's charges for furnishing medical records in print, by fax, or electronically along with coding and related services?
No. The true object was the provider's medical-record and information services, not the paper or other property transferred, so charges to healthcare providers and requesting parties were not subject …
A company delivers electronically generated products for its clients and gives them a web-based interface (with a layout-design tool) to manage orders and view reports. Are its 'Basic Package' charges subject to Tennessee sales tax when the whole service runs on the company's software?
No. The company's 'Basic Package' charges are NOT subject to Tennessee sales tax. The package runs on the company's software — including a web-based interface clients access from Tennessee — and softw…
Could the Greigs recover a $1,610 income-tax overpayment when their timely 2010 refund claims went unanswered but they waited until 2015 to act again?
No. The Greigs timely filed two 2010 claims for a $1,610 2008 income-tax overpayment, but the Department neither granted nor denied them. After 120 days, they had 90 more days to protest or sue, or th…
Is the sale of a Guaranteed Asset Protection (GAP) waiver contract taxable as part of the price of a motor vehicle in Nebraska?
Yes -- it is taxable. Revenue Ruling 01-16-1 concludes that when a motor vehicle purchaser (borrower) buys a Guaranteed Asset Protection (GAP) waiver contract from the retail seller of the vehicle (cr…
Must an owner collect Georgia's $5-per-night hotel-motel fee when three condominiums are separate buildings rented only as whole units?
No. The property consisted of three separate condominium buildings, and each condominium was rented as one accommodation rather than by bedroom. Neither the property nor any individual building had fi…
Were fees charged to play in bridge games taxable when spectators could watch without paying admission?
Yes. Because only players paid and spectators entered free, the bridge participation fee was a taxable admission. If spectators had paid a taxable admission, the players' participation fee would have …
Did an out-of-state S corporation create Virginia income-tax nexus through one remote employee handling accounting, HR, payroll, legal, and customer support?
Yes, apparently. The Virginia employee's bookkeeping, accounting, HR, payroll, legal consultation, and customer support were not protected solicitation under P.L. 86-272 and were sufficient to create …
Was an out-of-state college student a Virginia resident for tax purposes after maintaining a Virginia abode for more than 183 days in 2012?
Likely yes. The student could retain domicile in another state, but Virginia's separate actual-resident rule applies when a person maintains a Virginia abode for more than 183 days. Her spring and fal…
Could a leasehold owner appeal a county's local real-property tax assessment to the Virginia Department of Taxation?
No. The Department of Taxation had no statutory jurisdiction over a local real-property assessment appeal, including the taxpayer's claim that the county insufficiently discounted a leasehold interest…
Are college bookstore textbooks exempt from Georgia sales tax when the U.S. Department of Veterans Affairs pays the college directly?
Yes. Textbooks received by eligible students were exempt when the U.S. Department of Veterans Affairs paid the college directly. The ruling's footnote states that the sale would instead be taxable if …
How did Florida tax the operator's vessel leases and its customers' crewed charters between Florida and Cuba?
The operator's own bareboat vessel lease was taxable only to the extent of Florida use. Its subsequent crewed charters to customers were nontaxable, while supplies used and charges incurred in Florida…
Did a divorce property-settlement agreement assigning tax liability to one spouse prevent Virginia from collecting a joint-return assessment from the other spouse?
No. Spouses who filed a joint Virginia return were jointly and individually liable for the full tax. Their divorce agreement could allocate responsibility between them, but it could not bind the Depar…
Was a foreign citizen who lived and worked abroad in 2012 exempt from Virginia resident tax even though he retained a Virginia house, vehicles, and license?
He was not taxable as a Virginia resident for 2012, but he still owed Virginia tax as a nonresident on rent from his Virginia house. The federal substantial-presence test did not control Virginia resi…
Did 90 days of full-time National Guard duty qualify for Virginia's subtraction for basic military pay received during extended active duty?
No. The husband's orders placed him on full-time National Guard duty, which the cited federal definitions distinguish from active duty. He therefore did not qualify for Virginia's extended-active-duty…
Are Internet-based large-file transfer subscription plans subject to New York sales tax?
No. The plans are a nontaxable bridging service. Their primary function is letting a customer send large files to recipients over the Internet: the customer uploads a file to the provider's server and…
Does building a manufacturing plant inside a federal Foreign Trade Zone let a company defer Texas sales and use tax on the equipment and materials it imports to build it?
No deferral. The Comptroller ruled that a company building a manufacturing plant inside a federal Foreign Trade Zone (FTZ) still owes Texas use tax on the equipment, machinery, and other goods it impo…
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